Taiwan Semiconductor's Q4 Earnings Beat Estimates, Revenues Rise Y/Y

Taiwan Semiconductor Manufacturing Company Limited TSM reported fourth-quarter 2025 earnings per share (EPS) of $3.14, which increased 40.2% year over year. TSM’s fourth-quarter EPS surpassed the Zacks Consensus Estimates by 11.4%.

TSM reported net revenues of $33.73 billion, up 25.5% year over year. The figure surpassed the Zacks Consensus Estimate by 1.4%.

TSM’s Financials in Detail

TSM’s revenue distribution by platform comprises high-performance computing, smartphone, Internet of Things, automotive, digital consumer electronics and Other segments, which contributed 55%, 32%, 5%, 5%, 1% and 2%, respectively, in the fourth quarter.

Wafer revenues by technology account for 3nm, 5nm, 7nm, 16/20nm, 28nm, 40/45nm, 65nm, 90nm, 0.11/0.13um, 0.15/0.18um and 0.25um and above products. In the fourth quarter, the largest contribution to wafer revenues was from 5nm technology, accounting for 35% of the total.

Taiwan Semiconductor Manufacturing Company Ltd. Price, Consensus and EPS Surprise

Taiwan Semiconductor Manufacturing Company Ltd. price-consensus-eps-surprise-chart | Taiwan Semiconductor Manufacturing Company Ltd. Quote

This was followed by 3nm at 28% and 7nm at 14%. The 16/20nm and 28nm nodes each contributed 6%, while 40/45nm and 0.15/0.18um technologies made up 3% and 2% of the revenues, respectively. Contributions from 65nm and 0.11/0.13um technologies were 4% and 1%, respectively. The 90nm node accounted for 1%, and revenues from 0.25um and above were negligible at 0%.

Geographically, North America was the dominant contributor to net revenues, accounting for a substantial 74% of the total. China and the broader Asia Pacific region contributed 9% each, while Japan and EMEA region each generated 4% of the revenues.

TSM’s gross margin was 62.3%, which expanded 330 basis points (bps) from the year-ago quarter. TSM’s operating margin of 54% expanded 500 bps year over year. TSM’s net profit margin was 48.3%, which expanded 520 basis points.

Balance Sheet & Cash Flow of TSM

As of Dec. 31, 2025, cash, cash equivalent balances and investments in Marketable Financial Instruments were $97.59 billion, up from $90.11 billion as of Sept. 30, 2025.

Inventories were $9.16 billion in the fourth quarter compared with $$9.46 billion in third-quarter 2025. Accounts receivable decreased to $8.96 billion from $10.08 billion in the previous quarter.

The long-term debt was $32.25 billion at the end of the quarter, down from the previous quarter’s $34.15 billion. TSM posted a free cash flow of NT$368.60 billion.

TSM Provides Guidance for Q1 2026

For the first quarter of 2026, TSM stated that it expects revenues to be between $34.6 billion and $35.8 billion, based on its current business outlook. The Zacks Consensus Estimate is pegged at $32.52 billion.

The company also noted that, assuming an exchange rate of one U.S. dollar to 31.6 New Taiwan dollars, it anticipates a gross profit margin between 63% and 65% and an operating profit margin in the range of 54-56%.

TSM’s Zacks Rank and Stocks to Consider

Currently, TSM carries a Zacks Rank #3 (Hold).

Micron Technology MU, Allot Ltd. ALLT and Analog Devices ADI are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Amphenol, Allot and Analog Devices sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 earnings has moved upward by 3 cents to $31.39 per share in the past seven days, calling for a year-over-year surge of 278.6%. Micron Technology shares have soared 200.3% in the past six months. 

The Zacks Consensus Estimate for Allot’s 2026 earnings has been revised upward by 3 cents to 28 cents per share over the past seven days and suggests a year-over-year increase of 24.3%. Allot shares have jumped 26.4% in the past six months. 

The Zacks Consensus Estimate for Analog Devices’ fiscal 2026 earnings has been revised upward by 13 cents to $9.92 per share over the past seven days, suggesting a year-over-year increase of 27.3%. Analog Devices shares have surged 26.5% in the past six months.

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